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A testable model of consumption with externalities
Ist Teil von
Journal of economic theory, 2009-07, Vol.144 (4), p.1804-1816
Ort / Verlag
New York: Elsevier Inc
Erscheinungsjahr
2009
Link zum Volltext
Quelle
Alma/SFX Local Collection
Beschreibungen/Notizen
This paper presents a nonparametric model of interdependent preferences, where an individual's consumption may act as an externality on the preferences of other consumers. We assume that individual price consumption data is observed for all consumers. It is known that the general consumption model with externalities imposes few restrictions on the observed data, where the consistency requirement is Nash rationalizability. We motivate potential games as an important sub class of games where the family of concave potential games is refutable and imposes stronger restrictions on observed data. We use this framework to extend the analysis of Brown and Matzkin [D. Brown, R. Matzkin, Testable restrictions on the equilibrium manifold, Econometrica 64 (1996) 1249–1262] on refutable pure exchange economies to pure exchange economies with externalities. Finally, we discuss an application of this model to inter-household consumption data.